2022 Latest FAR dumps – Instant Download PDF [Q16-Q32]

QUESTION 16
Which of the following statements best describes an operating procedure for issuing a new Financial
Accounting Standards Board (FASB) statement?

QUESTION 17
According to the FASB conceptual framework, which of the following is an essential characteristic of an
asset?

QUESTION 18
Envoy Co. manufactures and sells household products. Envoy experienced losses associated with its
small appliance group. Operations and cash flows for this group can be clearly distinguished from the rest
of Envoy’s operations. Envoy plans to sell the small appliance group with its operations. What is the
earliest point at which Envoy should report the small appliance group as a discontinued operation?

QUESTION 19
On January 2, 1993, Quo, Inc. hired Reed to be its controller. During the year, Reed, working closely with
Quo’s president and outside accountants, made changes in accounting policies, corrected several errors
dating from 1992 and before, and instituted new accounting policies.
Quo’s 1993 financial statements will be presented in comparative form with its 1992 financial statements.
This question represents one of Quo’s transactions. List B represents the general accounting treatment
required for these transactions. These treatments are:
. Cumulative effect approach – Include the cumulative effect of the adjustment resulting from the
accounting change or error correction in the 1993 financial statements, and do not restate the 1992
financial statements.
. Retroactive or retrospective restatement approach – Restate the 1992 financial statements and adjust
1 992 beginning retained earnings if the error or change affects a period prior to 1992.
. Prospective approach – Report 1993 and future financial statements on the new basis but do not restate
1 992 financial statements.
Item to Be Answered
Quo changed from FIFO to average cost to account for its raw materials and work in process inventories.
List B (Select one)

QUESTION 20
Lore Co. changed from the cash basis of accounting to the accrual basis of accounting during 1994. The
cumulative effect of this change should be reported in Lore’s 1994 financial statements as a:

QUESTION 21
Which of the following types of entities are required to report on business segments?

QUESTION 22
Arpco, Inc., a for-profit provider of healthcare services, recently purchased two smaller companies and is
researching accounting issues arising from the two business combinations. Which of the following
accounting pronouncements are the most authoritative?

QUESTION 23
According to the FASB’s conceptual framework, the process of reporting an item in the financial
statements of an entity is:

QUESTION 24
Grum Corp., a publicly-owned corporation, is subject to the requirements for segment reporting. In its
income statement for the year ended December 31, 1991, Grum reported revenues of $50,000,000,
operating expenses of $47,000,000, and net income of $3,000,000. Operating expenses include payroll
costs of $ 15,000,000. Grum’s combined identifiable assets of all industry segments at December 31,
1 991, were $40,000,000.
Cott Co.’s four business segments have revenues and identifiable assets expressed as percentages of
Cott’s total revenues and total assets as follows:

Which of these business segments are deemed to be reportable segments?

QUESTION 25
Which of the following should be reported as a prior period adjustment?

QUESTION 26
Which of the following describes how comprehensive income should be reported?

QUESTION 27
There are multiple active markets for a financial asset with different observable market prices:

There is no principal market for the financial asset. What is the fair value of the asset?

QUESTION 28
If a company is not presenting comparative financial statements, the correction of an error in the financial
statements of a prior period should be reported, net of applicable income taxes, in the current:

QUESTION 29
A development stage enterprise should use the same generally accepted accounting principles that apply
to established operating enterprises for:

QUESTION 30
On January 2, 1993, Quo, Inc. hired Reed to be its controller. During the year, Reed, working closely with
Quo’s president and outside accountants, made changes in accounting policies, corrected several errors
dating from 1992 and before, and instituted new accounting policies.
Quo’s 1993 financial statements will be presented in comparative form with its 1992 financial statements.
This question represents one of Quo’s transactions. List B represents the general accounting treatment
required for these transactions. These treatments are:
. Cumulative effect approach – Include the cumulative effect of the adjustment resulting from the
accounting change or error correction in the 1993 financial statements, and do not restate the 1992
financial statements.
. Retroactive or retrospective restatement approach – Restate the 1992 financial statements and adjust
1 992 beginning retained earnings if the error or change affects a period prior to 1992.
. Prospective approach – Report 1993 and future financial statements on the new basis but do not restate
1 992 financial statements.
Item to Be Answered
During 1993, Quo determined that an insurance premium paid and entirely expensed in 1992 was for the
period January 1, 1992, through January 1, 1994.
List B (Select one)

QUESTION 31
Brock Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative.
The adjusted trial balance at December 31, 1989 included the following expense and loss accounts:

One-half of the rented premises is occupied by the sales department. Brock’s total selling expenses for
1 989 are:

QUESTION 32
Rock Co.’s financial statements had the following balances at December 31:

What amount should Rock report as comprehensive income for the year ended December 31?